ECL on loans designated at FVOCI

[Maverick009]

Hello

Can anyone explain how to account for the ECL on FVOCI loans. Most of the examples out here speak to debt instruments only. Is this covered by IFRS 9 par 5.5.2?

[JRSB]

yes

[Marek Muc]

Not sure what you mean - a loan is a type of debt instrument

[Maverick009]

Specifically loans disbursed to customers

[Marek Muc]

It's still a debt instrument

[JakobLavrod]

The way I think about FVOCI is that you deal with the loan in the PnL as if it where amortized cost, while in the balance sheet as if it where FVPL. The mismatch between these two views goes to OCI. In other words, when computing ECL , you can follow the exact same process as for amortized cost.

[Maverick009]

From IFRS 9 Par. 5.5.2

I would think the ECL on FVOCI loans disbursed to customers are recorded as a Dr/Cr to both PnL and OCI and not to the Gross loans in the balance sheet. The only adjustment to the balance sheet would be the fair value gain or loss.

[JakobLavrod]

Yes, apologies if what I wrote above was unclear, this is what I mean. It will have the consequence of the balance sheet representing the fair value position, while ECL still flow though PnL.